Dwelling equity

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For some fixed amount of Class A Investment Shares (nominally $150,000), one or more members and their legal dependents (a "family unit") get a building right ("share of the soil").

On top of that, a suitable amount of Class A Investment Shares that will differ for each dwelling earns the "family unit" a long-term lease for $1 per year for that dwelling.

Family units who do not have enough Class A Investment Shares to cover the value of their dwelling and/or "soil" will take out an internal loan with a variable rate of 120% of the Statistics Canada rate of inflation. A suitable payment schedule will be worked out that must include, as a minimum, the interest and a small amount on principle.

Shared dwellings and dwellings with shared common space are separated between family units based on a simple formula based on type of use, area, and value.

Exclusive Use areas are those that are used exclusively by one family unit.

Dwelling Shared Use areas are those that are used by all of the family units sharing a dwelling.

Community Shared Use ares are those that are used by all of the residents in the entire EcoReality site.

Value of an area will typically be the same for all areas in a dwelling, unless

an independent evaluator (such as a realtor or appraiser) reports that some areas have different values, such as a basement or unfinished area

certain high-value areas, such as a kitchen, are exclusively used.

The areas of exclusive use for each family unit are totalled, and multiplied by an appropriate square-foot value

The areas of shared use are totalled, multiplied by a square-foot value, divided by the number of family units sharing the dwelling (Dwelling Shared Use), or by the number of family units residing at EcoReality (Community Shared Use), then added to each family unit's exclusive use value, to arrive at a total amount of Class A Investment Shares that are required to cover the value of the structure as used by each family unit.

Certain expenses (phone, electricity if metered, etc.) accrue directly to the family unit occupying a dwelling, or apportioned according to Dwelling Shared Use area.

Pooled expenses (property taxes, insurance) are pro-rated based on area of exclusive usage, plus an equal share of area of common usage (Community Shared Use).

As family units go through changes, the "piece of soil" cost remains constant, but the actual building occupied and the number of Class A Shares involved can be flexible.

Family units in the process of building will supply their own temporary structures (yurt, trailer, etc.) while building. Unless agreed otherwise, EcoReality will not own such temporary structures in exchange for Class A Investment Shares. Families will be responsible for removing structures upon completion of building.

Examples

Example:

Joe and Frieda are each members, and have 837,500 Class A Investment Shares.

After their contribution for their "soil," they have 737,500 Class A Investment Shares remaining.

They contribute 424,320 shares for the larger of two houses (2656 sqft), and have 313,180 Class A Investment Shares remaining.

They contribute 128,625 shares for an outbuilding with shop/studio/garage (1715 sqft), and have 184,555 Class A Investment Shares remaining.

They loan the co-op their remaining 184,525 shares to the co-op, to be loaned to others to make up their soil/dwelling contributions.

The co-op grants them a 99 year lease on the larger of the two houses and the outbuilding for $1 per year.

They pay 74% of the taxes and insurance (2656 house + 1715 outbuilding / 5870 total buildings area) that are attributable to structures.

They pay an equal amount of taxes and insurance for the shared land.

Another Example:

Fred and Rita are each members, and have 82,500 Class A Investment Shares.

They want to live in the smaller of two houses (1499 sqft), valued at $224,850

Their "soil" plus house comes to 324,850 Class A Investment Shares.

They borrow 242,350 Class A Investment Shares from the co-op.

The current inflation rate is 2.4%, their current interest rate is 2.88%.

Their current monthly payment for a 20 year plan would be $1,329.56, plus $1/year.

The amount of their payment in excess of interest earns them additional Class A Investment Shares.

The amount of their payment that is interest ($581.64) goes to the co-op, to be used for overhead expenses.

They pay 26% of the taxes and insurance (1499 house / 5870 total buildings area) that are attributable to structures.

They pay an equal amount of taxes and insurance for the shared land.

Either party can use the space they lease for any legal purpose, including renting it to other members or renting it back to the co-op. Habitation by non-members would be subject to approval of the co-op.

Yet Another Example:

After 14 years, Irma and Greg's kids grow up and leave home, and Irma runs off with her electric scooter mechanic. Greg decides to down-size from their 1,400 sqft dwelling into a 600 sqft dwelling that has just become available.

They funded $140,000 into their dwelling, in addition to $100,000 for their share of "soil," and received 240,000 Class A Investment Shares.

Greg agrees to commit 60,000 of those shares to the smaller dwelling (in addition to 100,000 shares for the "dirt"), and submits, in writing, a redemption request for 80,000 shares, which he will use to buy out Irma's interest.

The co-op has up to three years to redeem those shares, nominally when someone wants to live in Irma & Greg's old place and can buy the 140,000 shares (plus 100,000 for the "soil") to cover it.

Greg knows Jill and Arnold, interested in co-operative living and looking for a home of about 1,400 sqft, who can fund $240,000.

The members' accept Jill and Arnold's member applications, $2,000 member share payments, and $240,000 Class A Investment Share payment.

Greg receives $80,000 for his redemption request as soon as all funds have cleared.